As previously reported, Campalock LTD (formerly Michel Mercier LTD) and Michel Mercier previously reached a coexistence agreement which was rejected by the Israel Patent Office who fined both parties for wasting the court’s time.

According to an Affidavit submitted by Mr Avshalom Hershkowitz, the Deputy CEO of the company, Mr Mercier is an entrepreneur and inventor in the field of hair care, who created both the brand that carries his name, and the company. The company owns the patents and designs for hair untangling equipment invented by Michel Mercier.

Over the years, differences of opinion between the company and Mr Mercier resulted in the parties requesting the court’s arbitration.

Following a negotiated settlement, the parties have now requested that the mark for the hair brushes remain the property of the company, but the same mark for hair cleansing and other treatments, and electronic and manual hair styling equipment, hairdressing services and schools remain the property of Mr Mercier. However, this agreement was not presented to the Israel Patent and Trademark Office.

Now the companies request that both marks be allowed to register.

The parties stated their case and attempted to convince the Israel Patent and Trademark Office that parallel registration was allowable under Section 30. The parties considered their case an exception that justified coexistence. The parties argued that they have been effectively coexisting for over a year without problems and without any customer complaints or confusion. Furthermore, in addition to the name Michel Mercier, the company’s products include the term “by Campalook”. Forbidding coexistence would make filing abroad difficult as the Madrid Protocol could not be used and the parties further noted that the USPTO had agreed to register the two marks.

Section 30 states as follows:

(a) Where it appears to the Registrar that there is current use in good faith, or where there are other special circumstances which in his opinion justify the registration of identical or similar trademarks in respect of the same goods or description of goods by more than one proprietor, the Registrar may permit such registration subject to such conditions and limitations, if any, as he may think fit. (Amendment No.7) 5770-2010 (b) A decision of the Registrar under subsection (a) shall be subject to an appeal to the Supreme Court; an appeal as aforesaid shall be filed within 30 days of the date of the Registrar’s decision; in the appeal, the Court shall have all the powers conferred upon the Registrar in subsection (a). (Amendment No. 7) 5770-2010 (c) The appellant shall give notice to the Registrar of the filing of an appeal under subsection (b) within 30 days from the date of its filing. (Amendment No. 7) 5770-2010 (d) In an appeal under subsection (b) the Court, if so required, shall hear the Registrar

The Equitable behaviour and desires of the parties themselves are necessary but not the only considerations. The parties wish to part company and have reached an agreement that the Patent Office is not party to. Since the Applicant was himself unhappy with the agreement at one stage, it went to arbitration. The parties now want the Patent Office to ratify the agreement, despite most details being obscure. Nevertheless, there is no indication of inequitable behaviour.

However, the Patent Office is also responsible to protect the public interest and coexistence agreements that mislead or confuse the public regarding the source of goods cannot be ratified. In this regard, the deputy commissioner referred to the Karl Storz vs. Bausch and Lamb decision from 2009, and to the biosensors ruling of the District Court.

In this instance, the two parties do not have an ongoing business arrangement, but the mark is the same and the goods and services are in the same class. Furthermore, Michel Marcier remains seen as the source of goods and the company has had to add their name to indicate otherwise. However, the addition of the company name is not part of the applied for mark and they could stop adding it. Furthermore, it does not imply a lack of relationship with Michel Mercier. Since Michel Mercier is a real person who is active in the field, a reasonable consumer would assume an ongoing relationship with him.

It is true that the USPTO allowed registration to both parties. However, with reference to the Trademark Manual of Examining Procedure, it appears that the USPTO will allow different legal entities to register the same mark(s) if it considers that there is a connection between them:

“Section 2(d) of the Trademark Act, 15 U.S.C. §1052(d), requires that the examining attorney refuse registration when an applicant’s mark, as applied to the specified goods or services, so resembles a registered mark as to be likely to cause confusion. In general, registration of confusingly similar marks to separate legal entities is barred by §2(d). See TMEP §§1207–1207.01(d)(xi). However, the Court of Appeals for the Federal Circuit has held that, where the applicant is related in ownership to a company that owns a registered mark that would otherwise give rise to a likelihood of confusion, the examining attorney must consider whether, in view of all the circumstances, use of the mark by the applicant is likely to confuse the public about the source of the applicant’s goods because of the resemblance of the applicant’s mark to the mark of the other company. The Court stated that:

The question is whether, despite the similarity of the marks and the goods on which they are used, the public is likely to be confused about the source of the hair straightening products carrying the trademark “WELLASTRATE.” In other words, is the public likely to believe that the source of the product is Wella U.S. rather than the German company or the Wella organization.“

…

Therefore, in some limited circumstances, the close relationship between related companies will obviate any likelihood of confusion in the public mind because the related companies constitute a single source”.

In Israel Law, there is no similar clause that allows a connection between separate legal entities to be sufficient for them to be considered a single source. However, where companies are daughter companies of the same concern, under certain circumstances it may be possible to allow them to own confusingly similar marks (See Seligsohn 1973, Page 55).

This case is different. The Agreement between the parties is more of a divorce than anything else. It states the lack of connection between Michel Mercier and the company. It is not clear what was disclosed to the USPTO and their decision to allow the two marks to coexist has not been endorsed by a court. The decision is not sufficient to be relied upon as a comparative ruling of a foreign judiciary.

The lack of problems caused over the twelve months of coexistence de facto is also of limited value since it is not clear that the consumers purchasing the hairbrushes were aware that there was no ongoing connection with Michel Mercier. It does not seem that any attempt was made to poll the customers.

Furthermore, 12 months is a short period. In the Biosensors ruling, Judge Schitzer noted that in that case, the coexistence on which registration in parallel was requested was two years, but the cited case law related to very much longer periods.

Whilst it is true that the company Campalock LTD owns the various patents and designs, that not necessarily mean that trademarks be considered in the same manner. The designs and patents may be the basis of the sold product range and can be bought and sold, but the name is the public face of the company and has to identify the source of the goods.

Certainly allowing the marks would facilitate international trademark registration by Campalock via Madrid, but traditional national registration remains an option and the ease of registration abroad via the Madrid Protocol is not a relevant consideration for the Israel Patent and Trademark Office to consider when ruling on whether to allow two competing marks to coexist.